SELECT COMMITTEE ON ENVIRONMENT AND LOCAL GOVERNMENT debate -
Thursday, 31 May 2001

Vol. 4 No. 2

Motor Vehicles (Duties and Licences) Bill, 2001: Committee Stage.

Chairman

The primary purpose of the Bill is to give effect to the increase in motor taxation of between 4% and 6% for private cars and 6% on goods vehicles with effect from 1 April 2001. It provides for a reduced rate of motor taxation for vehicles kept exclusively on an offshore island and an exemption from motor tax for vehicles used exclusively for mountain and cave rescue purposes. It also provides the euro rate of motor tax arising from the introduction of euro notes and coins from 1 January 2001. I welcome the Minister for the Environment and the Local Government and his officials. I suggest we consider the Bill until noon and if we have not concluded by then a further meeting will be arranged. Agreed? Agreed.

For the information of Members it is proposed to group the following amendments for the purpose of debate: amendments Nos. 1 and 5, Nos. 2 and 3 as well as Nos. 4 and 7. All other amendments which are in order will be discussed individually.

SECTION 1.

Mr. Gilmore

I move amendment No. 1:

In page 3, between lines 19 and 20, to insert the following definition:

" 'tertiary roads' includes roads in housing estates taken in charge by a local authority.".

I spoke about this on Second Stage and I do not propose to repeat ad nauseam what I said then. The biggest problem we have with the roads is the inability of local authorities to maintain and upgrade them, mainly in urban housing estates. These were roads built for the most part by the developers of the estates. In many cases, and here I am going back 25 to 30 years and estates of that age, the standard of road building was very poor, to put it mildly. As a result of the traffic using these roads and the amount of work done on them - digging them up for gas pipes and telephone cables - many of the roads have fallen apart over the years. The irony is that these are the first roads to be used by those paying the motor tax, which goes into the fund for the upkeep of roads and their maintenance by local authorities.

My experience in Dún Laoghaire-Rathdown, which is something Deputy Mitchell referred to on Second Stage and will probably refer to again, is that one goes to the county council about a road which is literally falling apart and has not been resurfaced or maintained properly for a very long time. Footpaths on the same road will be in a dangerous state and elderly people keep telling me they are terrified to use such footpaths because of the potential danger of tripping and so on. The local authority will tell you it cannot do anything because the tertiary road grant is not big enough to fix these roads. As I understand it, a grant is made available by the Minister from the surplus money generated in the local government fund about mid-year or towards the beginning of autumn. The amounts of those grants are tiny. Last year the local authority of which I am a member received £100,000 from that fund. Every Member knows the cost of repairing and resurfacing roads; £100,000 will do little or nothing. My purpose in putting down this amendment is to focus attention on the problem and I hope the Minister will respond positively to it. There should be an enhanced allocation for theseroads.

My second reason is that while this Bill is primarily about increasing the level of motor taxation it is also about the local government fund. As that is the fund from which road allocations are made, it seems to me the way in which that money is allocated does not take account of the volume of traffic and use. I appreciate there can be a great deal of disagreement as to what basis can be used for allocating roads money, whether it should be on a per kilometre basis or otherwise.

The difficulty with the per kilometre basis is that it takes no account of the level of usage. Roads in a housing estate used by a large number of cars, public transport vehicles and other heavy vehicles such as refuse trucks, just do not stand up to that and they need urgent attention. I do not object to the level of increase proposed here, it is fairly modest, but if we are increasing taxation and telling motorists their money is to go to a local government fund to be used to repair and maintain the roads, among other things, then we are not far off the day when motorists will seriously question what they are paying their motor tax for if local authorities cannot maintain roads outside their own houses and areas in some kind of reasonable condition.

Ms Clune

Deputy Gilmore raised an important point that is worth highlighting. He is absolutely right, and in my local authority area the condition of housing estate roads has deteriorated. Those roads have been the victims of the lack of investment in our roads. Many of the roads I am thinking of have not been touched since the 1970s, when they were first built. They give areas a very poor image and residents feel despondent as their estate does not look well. There are cracked footpaths and broken roads, with potholes and roads that have not been resurfaced or repaired since they were constructed.

The idea that investment in roads is based on road length or per kilometre is not much comfort to urban dwellers who use these roads regularly. These people spend their time on urban roads; they do not travel from Cork to Dublin or to west Cork on a regular basis. They spend most of their time making short local trips and the condition of many of these roads is appalling. The road resurfacing programme in my local authority is having some effect but is not sufficient. The local authority is inundated with requests from various areas for inclusion in the programme. It is worth discussing the matter on which I would like to hear the Minister's response, including his views on investment in the road network. It is largely urban dwellers who have to put up with these roads on a daily basis.

Ms O. Mitchell

I support Deputy Gilmore. We are members of the same county council and though on different area committees we are suffering exactly the same problems. There seems to be something terribly wrong with the level of grant going to urban local authorities. I am not sure if this is based on some historical formulae. Urban roads, even in housing estates, are carrying huge volumes of traffic. Two roads quite close to me have completely collapsed and we are considering closing them as we do not have the money to repair them. They are in a dangerous state. Older estates in particular are really suffering and have had no maintenance whatsoever in 20 or 30 years while the level of traffic has been growing.

My colleague from County Roscommon said he is very much in favour of the allocation by kilometre of road and if I was representing that county I would also be in favour of it but the reality is that while they may have more roads the volume of traffic on our roads has a huge impact in terms of wear and tear. The condition of footpaths in areas primarily inhabited by older people cannot be justified. We have a very disaffected public in terms of the local authority and what makes them very angry is when they see apparently endless amounts of money being spent on new motorways and other infrastructure while their areas seem to be totally neglected. There seems to be money for new developments but none for maintenance.

I fully support what Deputy Gilmore said. I cannot remember the exact allocation but my county is divided into two area committees and our entire footpath allocation last year was spent on replacing a footpath on one side of one road. This is an example of how the funding is appalling and inadequate. Doubling an allocation of £100,000 is totally inadequate. Perhaps a concentrated programme is necessary. I cannot over emphasise the extent of the problem.

Minister for the Environment and Local Government (Mr. Dempsey)

The effect of amendment No. 5 would be to amend the Local Government Act, 1998, to give a particular priority to tertiary roads in the allocation from the local government fund over and above water and sewerage services, housing, etc. Amendment No. 1 proposes to insert a definition of tertiary roads in the Bill which would include roads in housing estates taken in charge by a local authority. The amendment is not necessary. Once housing estate roads are taken over by a council they are non-national roads.

What Deputies said about housing estates completed in the 1970s is absolutely true - the roads are in very bad condition. In many cases members will know this is so because the councils have refused to take them over. Equally, they have neglected to pursue builders to have estates finished, or perhaps the builders have gone out of business. This is a major problem arising from the 1970s and early 1980s when changes were introduced. The problem has not entirely disappeared.

Up to now the legal position in relation to unfinished estates is that local authorities were not responsible and would not take responsibility as it meant rate and taxpayers funding councils would end up paying for private estates, which is a reasonable position. However, it is not a reasonable position to adopt if the local authority failed in its statutory duty to make builders and developers improve the estates. That is the reason in the planning and development legislation which we finalised and debated last year we have inserted provisions which will mean that if a local authority fails in its duty to pursue a builder to finish an estate in terms of roads, lights, etc, the residents of the estate within a seven year period can petition the council which will then be legally obliged to take over the estate and finish the work. This is a stick and carrot approach for local authorities to ensure, in terms of planning permission and building, that estates are properly completed in order that tax and ratepayers do not have to pick up the tab. Unfinished estates are being dealt with under the planning and development legislation and will form part of the next regulations which will very shortly be before the committee.

In terms of other estates it is perfectly in order and desirable that local authorities decide the priorities in spending money. I have been accused of interfering with local government in relation to waste management, as I have to a certain extent. If members of local authorities or the committee want me to tell local authorities in which estates to spend their non-national roads allocations I will do so. However, members of local authorities should tell their local authorities where to spend money - I cannot be responsible.

Deputy Mitchell said there is something terribly wrong with the way money is allocated in Dún Laoghaire-Rathdown where the roads are in a chronic state. The matter should be taken up with the local authority. The Chairman has often made great play about looking after the roads in County Kerry and I have been very generous to that county. The allocation to Dún Laoghaire-Rathdown has increased since 1997 for non-national roads by 400%.

Ms O. Mitchell

The population and the traffic——

Mr. Dempsey

The population has not increased by 400%.

Ms O. Mitchell

But they are driving 400% more.

Mr. Dempsey

It is wonderful, they all have four cars.

Ms. O. Mitchell

They are all coming from County Wicklow.

Mr. Dempsey

In 2001 Dún Laoghaire-Rathdown was allocated £12.631 million. It is receiving 4.5% of the non-national road grants allocated to county councils whereas it has only 0.68% of the non-national road network. Deputies spoke of support for doing this work on a per kilometre basis which would not suit Dún Laoghaire-Rathdown. The average allocation per kilometre for county councils is £3,213. Dún Laoghaire-Rathdown County Council receives £21,181 per kilometre, seven times what the average county council is receiving. If there is a serious road problem in Dún Laoghaire-Rathdown perhaps councillors would investigate it further at local authority level.

The point was made in the House this week that some counties are losing out substantially because they are not being paid for roads on a per kilometre basis. This is a good example of the reason this does not happen and other criteria are put in place and considered before allocations are made. While there has been some change in the method of allocation in the past ten or 12 years it has not changed substantially. Roads measurement, traffic count, wear and tear, population size and so on are taken into account. I am providing this information for Deputies, particularly in regard to Dún Laoghaire-Rathdown, because the issue was raised.

The effect of amendment No. 5 would be to give a particular priority over and above every other matter. Local authorities should have as much freedom and discretion as possible in regard to the allocation of funds. Amendment No. 1 seeks to insert a definition of tertiary roads which is not necessary. Consequently I cannot accept the amendments.

Mr. Gilmore

First, the Minister referred to the problem of roads which were not taken in charge and the new provisions in the Planning and Development Act relating to the taking in charge of roads. That is not my main concern. The roads to which I refer have for some time been in the charge of the local authorities. I do not think it is a question of interfering with the functions of local authorities and how they use their funds. This is a situation whereby funds for roads are collected centrally by the State, put in the local government fund and then distributed to the local authorities by the Minister. One cannot say to the local authorities that it is their business when the funds for the maintenance and upkeep of roads are put in a central fund and centrally distributed. This is about the distribution of that money and the general direction of the Department of the Environment and Local Government in terms of how that money is to be used. It is perfectly normal for road allocations to be made each year. There is an allocation for national primary roads, secondary roads, roads restoration and so on. There is nothing unusual in the principle of there being a general direction from the Department of the Environment and Local Government regarding the deployment of funds.

It is a fact that the road network in urban housing estates is very poor. It has been deteriorating for some time and is continuing to deteriorate. Local authorities state they do not have the resources to use, including their various commitments in relation to primary roads, secondary roads and so on. By the time housing estates are reached there is nothing left in the kitty. Where that will lead us is a bigger problem because the more these roads deteriorate, the more they will cost the public purse because in many cases they will have to be reconstructed. They will cost the public because of increased accidents involving claims against local authorities by those who fall on footpaths, broken roads and so on.

I am disappointed at the negative response of the Minister to the two amendments. Amendment No. 5 which he interpreted as proposing a priority for tertiary roads does not state anything about priority for such roads. It states that the Minister "shall have particular regard to the need for local authorities to maintain tertiary roads." This would be a rather mild general way of giving local authorities the hint that they must address the tertiary roads problems and set down guidelines in regard to the allocation of the money from the local government fund. In the absence of a more positive response from the Minister I have no choice but to put the amendments to the committee.

Amendment put and declared lost.

Section 1 agreed to.

Sitting suspended at 10.39 a.m. and resumed at 11.05 a.m.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Gilmore

Can the Minister tell us how much has actually been collected in motor taxation? What amount has been lodged to the local government fund since 1998?

Mr. Dempsey

The figure for this year is about £400 million. The figure for 1998, the year of introduction, was approximately £325 million. Gross receipts for last year totalled £391 million. We expect gross receipts for this year to total, taking into account the current increase, £420 million.

Mr. Gilmore

Can the Minister give me the figure for 1999, please?

Mr. Dempsey

The figure for 1999 was £377 million.

Mr. Gilmore

That does not reflect a huge increase in the number of car registrations.

Mr. Dempsey

No, it does not.

Mr. Gilmore

Why is income not higher?

Mr. Dempsey

It reflects registrations. While car sales increased very substantially receipts for registration only increased by approximately 3.8% which could have been caused by a number of factors. One obviously is the number of cars coming off the road. It could signify - we have been trying to follow up this matter through the Garda and by obtaining local authority statistics - less compliance, of which we have no evidence. That could be a possible explanation. It could also be a combination of both factors.

We had a lengthy discussion earlier this week regarding the greening of the motor taxation system. The change in VRT and motor tax which favours smaller cars has led to a change in the proportion of smaller cars. There was a 9% reduction in the number of 1500 cc plus cars and a consequent increase of the same level in the number of smaller cars as a result of the changes. This would result in less income. There is evidence that the motor trade has not been able to dispose of second-hand cars as fast as it previously could resulting in a larger number of cars remaining in garages. All these factors would affect receipts into the fund.

Mr. Gilmore

I do not wish to stick on this point but it obviously has implications elsewhere. Do we have figures for the actual numbers of cars registered? We have figures for income from car registrations. It would be interesting to know what the pattern has been as regards the car population.

Mr. Dempsey

Total income, for the most recent quarter, September 2000, for the overall taxed vehicle population was £1.687 billion. That includes all taxed vehicles. That is just less than a 5% increase on the 1999 number.

Mr. Gilmore

The perception, particularly in the past two years, as we see 00 and 01 registrations everywhere, is that there was a huge growth in the number of cars on the road. It is not borne out either by the numbers of registered vehicles or the increase in the revenue from that source. There is anecdotal evidence that in the past year there were many repossessions by the sector of the motor retail trade which operates hire purchase or other financial deals. Are there any figures on that? It appears from motor tax income and the numbers of registered cars that the perception of huge growth in car sales is inaccurate. I understand what the Minister said about the level of compliance, but that could be checked. If a car is registered in 1999 and not in 2000, the question of what has become of it arises. Is there a way of checking compliance other than by asking the Garda how many cars they are stopping on the road?

Mr. Dempsey

The figures are informative. Anecdotal evidence is rarely borne out by official statistics which always reveal that it is either an exaggeration or an understatement. The most reliable figures available are that in 1999 the number of vehicles, not just cars, taxed for the first time was 270,000, while 170,000 left the system through scrappage or were withdrawn. That represents a net "gain" of about 100,000, about 6% of the total number of vehicles. We estimate that approximately 40,000 were taken off the road as a result of the national car test.

One of the difficulties about accurate information is that we have the registration but not "death certificates" for cars. That will be part of the end of life vehicle scheme which we are introducing. I am discussing that with the motor trade. Then we will have reliable information at the end of each year on vehicles going out of the system. This year so far, the increase in gross receipts of motor tax is 12.57%, which includes the increase we are discussing.

Mr. Gilmore

The net would be around 6% or 7%.

Mr. Dempsey

The figure at the end of March was just under 12% of an increase. It is not easy to translate the 6% in one month by simply subtracting it. That would not be accurate. So far the average increase is around 12%.

Mr. Naughten

Has the Minister any evidence, even anecdotal, on the level of non-compliance? In the insurance sector non-compliance is around 10% according to the MAIB. If that is so in insurance, then motor tax non-compliance must be higher as people must present an insurance certificate to have a car taxed. Will there be mechanisms under the national vehicle and driver file to trace non-compliance? Recently the national press reported that tax discs are forged and sold for £10 or £20. That fundamental issue must be addressed. We must be able to trace both insurance and motor tax because the local authorities and the public are losing out. If it is around 10%, that is a substantial amount of money that should go to the local authorities. When does the Minister expect the national vehicle and driver file to be established?

Mr. Dempsey

The last year we conducted a survey of non-compliance was 1996 and 2.8% were persistent offenders. That compared favourably to the UK where it was 4% and Northern Ireland which was 7%. I am not casting aspersions on the insurance survey to which the Deputy refers but I do not know how accurate it is. The information we have does not suggest that motor tax evasion has increased significantly. I do not know exactly when, but there will be another survey in the near future to update the figures.

When we have the whole system computerised, it will be easier to do many things, such as develop the national vehicle and driver file. I said privately that if the system for recording fines was computerised we would have a higher collection rate. It is in the best interests of the local authorities, because the motor tax goes to them, to ensure that there is follow up of motor taxation. The lack of "death certificates" for cars mitigates against being totally accurate about the number of vehicles and ascertaining why a vehicle, previously taxed, is untaxed now. The first phase of the national vehicle and driver file, which improves the processing of motor vehicle registrations, commenced in November 1998 with the introduction of modern computer technology in Shannon. The next phase commenced at the end of 1999 when Wexford was the pilot site that went live to test the system. It was evaluated last year and some changes were implemented. The current situation is that Clare went live in February benefiting from the technical improvements resulting from the Wexford pilot test. A contract for the roll out of the system to the remaining tax offices, incorporating the new and revised improvements, has been awarded and the contractor has commenced work which will be completed over the next few months. We will have the national driver file by the end of 2001 and it will include the system for penalty points. Our end will certainly be complete by the end of this year and everyone is working towards that. The Garda and the courts have to ensure that their systems are compliant and there is ongoing contact between the Department and the Courts Service on that.

Mr. Naughten

How confident is the Minister that the Garda and the Courts Service will have their end complete by the end of 2001?

Mr. Dempsey

The Deputy will forgive me if I give him what is not meant to be a smart answer. The answer is that I am responsible for the system in the Department and I will endeavour to ensure that it is in place. Indications for the others are that they should be compliant before the end of this year or early next year.

Mr. Naughten

With respect to the Minister, perhaps he could come back when he gets an opportunity. He is the Minister with overall responsibility for the road safety strategy and at the end of the day the buck stops with him. The indications are that it will not be in place by the end of the year. It would be a pity if it is not but I will not dwell on it.

Mr. Dempsey

I accept what the Deputy says and I will raise it with my colleague, the Minister for Justice, Equality and Law Reform, who has direct responsibility there.

Question put and agreed to.

SECTION 3.

Mr. Dempsey

I move amendment No. 2:

In page 4, subsection (1)(b), lines 10 to 13, to delete subparagraph (ii) and substitute the following:

"(ii) by the addition of the following paragraphs after paragraph (f):

'(g) vehicles which are used exclusively for mountain and cave rescue purposes,

(h) vehicles which are used exclusively for underwater search and recovery purposes.'.".

This amendment is an addition to section 3 to include with vehicles used exclusively for mountain and cave rescue purposes another category of vehicle, namely, vehicles which are used exclusively for underwater search and recovery purposes. The effect of this is to exempt such vehicles from paying motor tax. During the debate on the financial resolution the question of taxing these sub-aqua vehicles used for emergency purposes arose. It was raised by Deputy Naughten and during the course of that debate I indicated a willingness, if it were possible, to introduce a change. I asked Deputy Naughten to state a case and we have been in correspondence since. The difference between this amendment and Deputy Naughten's amendment is the inclusion in my amendment of the "exclusive use" clause as a condition for exemption status. Once an exempt vehicle is used for any other purpose, be it private or recreational, liability for motor tax arises. That exclusive clause is a condition for exemption status of existing legislation both here and abroad.

Deputy Naughten subsequently spoke to me about this and I know he understands fully the concern we have that the vehicles would be used exclusively for the purpose claimed. He made a strong case concerning using the vehicles for training and I am assured that my amendment covers what he specifically asked for. It is worded in this way to keep it consistent with others. Once the vehicles are used for mountain and cave rescue purposes or underwater research and recovery, including training and so on ancillary to that, it is covered. I ask the Deputy to accept my amendment as being totally in the spirit in which he put his forward.

The Irish Underwater Council, the governing body for underwater sports in Ireland, represents 80 clubs and 3,500 divers throughout the entire island. They have written to me and drawn attention to a number of scuba diving clubs that have purchased vehicles to be used exclusively for the transport of search and recovery equipment. They have requested exemption from motor tax for vehicles which are used exclusively for underwater search and recovery purposes. The amendment I have table is guided by the council's request. I hope Deputy Naughten accepts that the concerns he raised are met in the amendment.

Deputy Naughten

First, I wish to thank the Minister for putting forward this amendment. We have no dispute in relation to the principle of it and I do not intend to move my own amendment as it now serves no purpose. I just want the definition of the word "exclusively" teased out and clarified. That is all we are in dispute over. The mountain cave and rescue would use their vehicle for training purposes as well and I would like the Minister to give a commitment that the associated training involved and other activities related to search and rescue, just as in the case of the sub-aqua vehicles, would be covered. Every time the vehicle is used it is not solely for the purpose of carrying out a search and rescue. It would at times be involved in important fundamental training because rescuers cannot be brought out unless they have comprehensive training. It may look as if we are trying to split hairs here. Both of us are coming from the same side but we must tie this down and ensure that there is no abuse of the system. The majority of sub-aqua clubs involved in search and rescue indicate that their vehicles - most of them own those vehicles - are used solely for that purpose and for the associated training.

I suggested putting in vehicles which are used exclusively for underwater search and recovery purposes and other activities associated with sub-aqua clubs or associated training. If the Minister can give me a commitment that under the particular wording here sub-aqua clubs that do not use their vehicles exclusively for search and rescue but do use them exclusively for sub-aqua activities will be exempted under his amendment I will accept that amendment.

Mr. Dempsey

I can give that assurance. When the Deputy raised this matter last night I consulted with a Parliamentary Counsel dealing with the Bill and it has been made clear that it is covered.

Mr. Naughten

I thank the Minister. It is not too often Ministers take on board what is said on Second Stage and come forward with amendments. The Minister should be complimented. The provision will be of immense benefit to the clubs involved.

Mr. Gilmore

How much will the increases in motor taxation yield in a full year?

Mr. Dempsey

They will bring in £20 million in a full year. We expect them to bring in £15 million this year.

Amendment agreed to.

Amendment No. 3 not moved.

Ms Clune

I move amendment No. 4:

In page 4, subsection (1)(b)(ii), between lines 13 and 14, to insert the following:

"(h) electrically assisted pedal cycles.'.".

The objective of this amendment is to allow electrically assisted pedal cycles to be included. We are trying to encourage people to leave their cars at home and use other modes of transport. This is a new means of transport that is becoming very popular and by including it in this section it will encourage greater use of such a facility, particularly in urban areas where the real benefit would be for such a vehicle. Bicycles require much hard work so any assistance we can get would be appreciated.

Mr. Haughey

Will the Minister also define the status of scooters, which are now very fashionable? I have noticed people using mechanically propelled scooters, particularly coming into Dublin during rush hour traffic. Are they defined in the legislation? Can I assume they are exempt from tax? If the Minister does not have the answer immediately, he can come back to me later.

Mr. Gilmore

I support Deputy Clune's amendment. If the Minister wants to introduce a genuinely greening measure into this Bill, this is an opportunity for him to do so. I ask him to accept the amendment.

Mr. Dempsey

In answer to Deputy Haughey's question, scooters are treated as mechanically propelled vehicles the same as the ones we are talking about here. Electrically assisted pedal cycles are taxed currently. In recognition of the minimal amount of damage they do environmentally, we are not proposing to increase the £22 fee on this. However, they use road space and are mechanically propelled vehicles, irrespective of how they are propelled.

The question of exempting them goes beyond just the motor taxation code. The Finance Acts are relevant to this. Once a vehicle is registered by the Revenue Commissioners, liability for motor tax arises from the date the vehicle is first used in a public place. All mechanically propelled vehicles have some impact on the environment and the public infrastructure. They represent an ever-growing part of the vehicle fleet and I encourage this. However, they contribute to some level of traffic congestion albeit to a much lesser extent than cars. They are all powered by petrol so they cause some environmental damage.

I will not accept the amendment. However, the members of the committee have made a case in relation to this and the Department is looking at the characteristics of this kind of vehicle to evaluate them so that we can make less prescriptive requirements about their use in public places under road traffic law. That will have to be done in the context of road safety. To go some way towards what members are suggesting, I am prepared to have the issue of motor tax on these vehicles considered further by the green taxation group and, depending on the recommendation it makes to me, I will undertake to review and revise this again.

Amendment No. 4 would exempt these vehicles. Amendment No. 7 would remove a specified rate for electric cycles, which would place the rate for electric bicycles under the residual private car category, which would mean they would be charged £102 in motor tax. I know that is not the Deputy's desire. This is as far as I am prepared to go on this. The arguments put forward from an environmental and other points of view have been strong and that is why we are not increasing the rate.

Mr. Kelleher

It is probably stretching the elasticity of the Bill's relevance, but these new scooters and mopeds have very high noise levels. We like to encourage the cheapest modes of transport. However, in some towns and cities that I have visited on the Continent, particularly in Italy, the quality of life is zero because of the noise these scooters and mopeds make. They may be environmentally friendly in fuel and space usage terms, but there are other issues that should be considered when the Minister puts this before the green taxation group.

Mr. Dempsey

From recollection, it is a matter that is being reviewed at EU level in the context of noise abatement in urban areas.

Mr. Kelleher

It is not a problem now but it could go the European route and we would have a great difficulty then.

Chairman

On a point of clarification, what rate of duty is chargeable on a low loader and tractor unit taking a track machine, which is classed as a disabled machine?

Mr. Dempsey

Tractors and agricultural tractors are at a specified rate of £45. Under the Road Traffic Act, 1961, a disabled vehicle is one that stands so substantially disabled as to be no longer capable of being propelled mechanically. Having regard to that definition, in the case of a plant hire operator, the conditions for taxation as a goods vehicle would suggest that a low-loader transporting a roadworthy caterpillar tractor vehicle would not qualify for the recovery vehicle tax rate. However, that is just an official interpretation of the Act, as distinct from a court ruling on it.

In relation to agricultural tractors, I wish to correct the figure quoted earlier. The annual fee will now be £52.

Chairman

As I understand it, the tracked caterpillar type of machine to which the Minister referred is, in effect, classified as a disabled machine. I believe it is generally not allowed to be driven directly on the normal public road and anybody doing so would be liable to prosecution for damaging the road surface.

Mr. Gilmore

Perhaps there is a case for increasing the level of taxation on those machines?

Mr. Dempsey

In certain circumstances, those vehicles can be used on the road.

Mr. Kelleher

When they are working?

Mr. Dempsey

They are usually transported by low-loaders, but they can be driven on the road for a short distance from the point of unloading to the actual working site.

Chairman

Perhaps I can discuss the issue later with the Minister.

Ms O. Mitchell

I apologise for the fact that I was called away earlier. I wish to deal with the issue of electrically assisted pedal cycles. I do not recognise the amendments which are here as those which I tabled, but I think the Minister knows my intent. I understand that in response to Deputy Clune he agreed to look at this issue, as he already promised back in March. There are thousands of these bikes now going onto the streets. They are a very popular and safe form of transport, offering an alternative to other less attractive forms, such as motorbikes and mopeds. I understand the Minister said they have to be insured and therefore they have to be taxed. Why do they have to be insured? They have a cut-out speed of 25 miles per hour, which is slower than a skateboard. There is no other country in which they are taxed as a motor vehicle. Some countries regard them as such a desirable form of transport that their purchase is grant-aided.

My real concern is that the law is turning a blind eye in practice. People find themselves in a very invidious position and they feel that it behoves us, as legislators, to ensure that legislation runs in tandem with the practical application of the law. I urge the Minister to deal with this issue as quickly as possible, whether under this heading or otherwise. I dread to think of the problems that might arise if there are serious accidents. In reality, these bikes are very safe. Another attractive feature is that they extend the age range for cycling and can open up a new lifestyle for older people. It seems unnecessarily bureaucratic to require them to have number plates, tax and insurance.

Mr. Dempsey

I accept that Deputy Mitchell was delayed elsewhere. I have indicated that we are looking again at the characteristics of this type of vehicle and trying to evaluate it from a departmental perspective to see if there are ways in which it might be dealt with less prescriptively in legislation. As well as my Department, the issue also has implications for the Department of Finance in relation to VRT. We will try to bring it to a conclusion as soon as possible. We also have to consider the road safety aspect. Any vehicle travelling at 25 miles per hour can cause serious injuries if a person falls off or if it is involved in a collision.

Ms O. Mitchell

A bike can also go at 30 or 40 miles per hour.

Mr. Dempsey

Perhaps, if one is in a rás. In deference to what the Deputy has said, we are evaluating the issue and I will come back on it. The motor tax aspect has been referred to the green taxation group. From an environmental aspect, as I mentioned earlier, electrically propelled vehicles are CO2 free at point of use, but the inefficiencies of generation and transmission processes on a life-cycle basis are also relevant. If one goes into the matter in great detail, there is a question as to whether such vehicles may have potentially higher CO2 emissions associated with them.

Ms O. Mitchell

I was not referring to vehicles which are fully electrically propelled, only those which are electrically assisted. The electrical power is used only on hills etc. The Customs and Excise people do not treat them as motor vehicles.

Mr. Dempsey

I am informed that they are subject to VRT.

Ms O. Mitchell

I understand that they are being imported without tax on the basis of the Customs and Excise classification.

Mr. Dempsey

Perhaps the Deputy should pass that information to the Customs and Excise authorities. On amendment No. 7, as I said, the £102 rate will apply. I will refer the Chair's technical question to my technical experts with whom we can go through it again.

Amendment, by leave, withdrawn.

Section 3, as amended, agreed to.

Sections 4 to 6, inclusive, agreed to.

SECTION 7

Amendment No. 5 not moved.

Question proposed: "That section 7 stand part of the Bill."

Ms O. Mitchell

I proposed an amendment to this section but cannot find it.

Mr. Kelleher

Is the Deputy opposing the entire section?

Ms O. Mitchell

I am as it seems to be the easiest way. I know what the Minister is trying to do in this section and explained my worries on Second Stage. His measure breaches the ring-fencing of the local government fund for the first time and once the first breach has been made it will be easy to do it again and again. The Minister may be genuinely talking about the physical issuing of a licence and that may be what he wants to pay for but I fear as there are many matters associated with the issue of a licence there will be more and more costs linked to it as a result of greater driver education, ongoing training and testing.

Safety issues are national issues and should be funded by central government, not from the local government fund. As the Minister is aware other Departments, such as the Department of Justice, Equality and Law Reform, are involved in promoting road safety. The Department of Education and Science is engaged in a pilot project on driver education. I fear that if the Minister dips in to the local government fund on this occasion other Ministers will do likewise under the guise of an expense associated with the issue of a driving licence. Such moneys should not be taken from the meagre funds given to local authorities. Although the Minister has said that the fund has been increased local authorities never receive enough. It is the thin edge of the wedge and I ask the Minister to reassure me. If not, I will press the amendment.

Ms Clune

I await the Minister's response as I agree with Deputy Mitchell. I call on him to clarify the section.

Mr. Gilmore

As I indicated on Second Stage yesterday I am opposed to this section and support the remarks of Deputy Mitchell. The Minister is raiding the local government fund and must be stopped. The fund was established to fund local government but this is an attempt to claw back from it moneys which should properly be expended centrally by the Exchequer. I would like the Minister to clarify my understanding that he takes money from the fund for expenses connected with the collection of motor taxation. How much of the proceeds of motor taxation does he take from the fund? What amount does he estimate this section will enable him to take from the fund for expenses associated with the administration of driving licences?

Mr. Dempsey

This is not a raid on the local government fund, nor is it intended to be. This measure provides for the removal of doubt. The expenses under debate have been deducted from the fund——

Ms O. Mitchell

Illegally.

Mr. Dempsey

——for the last number of years. It has been always assumed that the expenses associated with the collection of motor taxation also covered the administration of driving licences. To make sure that is the case we have introduced this specific measure in the Bill. Far from allowing other Ministers to raid the local government fund this provision specifically outlines what can be deducted from the fund. Only expenses associated with the issuing of driving licences and the collection of motor taxation can be deducted. This is in line with provisions put in place when the local government equalisation fund was being established by my predecessor. My provision borrows from the earlier Act. It is legitimate and in line with previous and consistent policy that motor taxation expenses, centrally incurred, are met from the fund.

Payments can be made from the local government fund towards general purpose and non-national road grants. The law also provides that costs incurred by the Minister for the Environment and Local Government in the collection of motor taxation will be payable from the fund. Section 7 is essentially a technical amendment to the provisions contained in section 6 of the Local Government (Financial Provisions) Act, 1997, and in the Local Government Act, 1998.

Deputy Gilmore asked about the cost. In the past three years an average of less than £350,000 was taken out of the local government fund for the issuing of driving licences. Administration costs associated with the collection of motor taxation are approximately £7 million, including all staff in the VRU and the costs associated with the national vehicle driver file. When all these matters are rolled out we expect the cost of the entire system to drop to about £3 million which will be beneficial. Section 7 is aimed at bringing equity to the treatment of the income and expenditure elements of the fund. The costs associated with driving licences administration are relatively small, particularly when one considers that the fund as a whole is worth £720 million. The average cost of administration is extremely low.

Ms Clune

Are the costs purely administrative or do they include the costs of training and testing drivers?

Mr. Dempsey

No, the legislation is designed to ensure local authorities do not dip in to the fund to meet such costs. They are purely administrative.

Ms O. Mitchell

Is the administration of the computer theory test funded from it?

Mr. Dempsey

No, that is separate.

Mr. Gilmore

The system of motor taxation is operated through the local authorities. Does the figure of £7 million include or exclude what they are spending?

Mr. Dempsey

Local authorities take their costs at source.

Mr. Gilmore

These therefore are exclusively the Department's costs. Motor tax discs are given out by the local authorities. As they are the ones doing the work how is the Department spending £7 million on it?

Mr. Dempsey

The total costs of the vehicle registration unit at Shannon are about £3.5 million. It services all of the motor taxation authorities and facilitates and co-ordinates what happens. The capital costs of the new computer system, NVBF, are being taken out of the fund. This is the reason it will drop. The VRU costs include salaries, wages and printing costs. It hands out all the reminders to the local authorities.

Ms O. Mitchell

What did the Minister mean when he said the local authorities take their costs at source?

Mr. Dempsey

Each motor taxation office calculates what it costs in staff and administration-

Ms O. Mitchell

Which are deducted before being sent to the local government fund?

Question put and agreed to.

Chairman

Is it agreed to continue and complete our consideration of the Bill? Agreed.

Amendment No. 6 not moved.

Sections 8 and 9 agreed to.

Amendment No. 7 not moved.

Schedule agreed to.

Title agreed to.

Bill reported with amendment.

Chairman

I thank the Minister and his officials for attending today's session and declare the meeting adjourned. The committee will reconvene on Wednesday, 13 June when we will consider the Estimates.